Smartphones to Replace Credit Cards
Posted on November 6th, 2010
Three U.S. telecommunication carriers, AT&T, Verizon and T-Mobile, are combining their efforts to spur mobile payments in the U.S., targeting a market dominated by Visa and MasterCard, the world’s biggest card networks. The plan will test the Smartphone system in three cities, Austin, Minneapolis and Salt Lake City.
Stores will be set up to accept a new smartphone swipe instead of a traditional card swipe. Consumers will be able to open an app on their smartphone, choose a bank or credit card account, and with a contactless wave of their hand, make a purchase without the use of a credit or debit card.
If the pilot program, called Mercury (for the Roman god of commerce and travel) and set to start in the middle of next year, is successful, it may be the beginning of the end for plastic debit and credit cards. Transactions will be processed by the same gateway services and merchants that Visa and MasterCard use and merchants will receive the payment that would have been paid to Visa or MasterCard, cutting into their bottom line. According to the Nilson Report, an industry newsletter, Visa and MasterCard handled nearly $2.5 trillion from credit cards last year, more than 4/5 of all payments made with plastic.
“We have long argued that real competition is missing from today’s payments market,” says Brian Dodge of the US Retail Industry Leaders Assn. Retailers may see an additional benefit from the new service when electronic reciepts, rewards and promotional information can be sent to their customers’ phones instantaneously.
Visa, MasterCard and American Express aren’t sitting idly by during the trial. They are working to develop their own technology, which is already being used in parts of Asia and Europe. Apple is already using iPhones to ring up customers, having teamed up with VISA to create a casing that can do all the credit transactions through the phone.
Be sure to see our complete list of the low interest credit cards >
Similar Posts:
- Proposal to Delay Debit Card Swipe-Fee Limits
- Cell Phone Looks to Replace Credit Cards
- Magnetic Strip Credit Cards a Hassle for Travelers
- How to cut the cost of holiday spending
- ATO to accept credit card payments
Filed under Credit Cards |